Semiconductor stocks are soaring, and it seems artificial intelligence is a major catalyst. With Nvidia leading the charge due to its AI chips, there’s a palpable buzz in Wall Street about the sector’s potential for even further growth.
This year, the iShares Semiconductor ETF has skyrocketed by a whopping 42%. This uptrend has been majorly influenced by the AI-driven demand. When you consider individual companies, Nvidia stands out as the goliath, with its market cap hitting a staggering $1.1 trillion. After experiencing a remarkable surge of nearly 230% in 2023, Nvidia’s second-quarter earnings have analysts believing there’s still room for growth in chip stocks. According to recent data, the average price target on Nvidia’s shares suggests it has the most substantial upside potential on the list. The potential 33% rally from its current price is noteworthy, especially when 72% of the analysts covering it rate the stock a buy.
Close on Nvidia’s heels is Advanced Micro Devices (AMD), boasting the second-largest market cap in the sector. Although it has already witnessed a 57% upswing this year, Wall Street analysts believe that its shares might see another surge of nearly 30%. Recently, Rosenblatt named both AMD and Nvidia as its primary AI selections. But, interestingly, AMD shares experienced a dip of 7% on a Thursday, even as Nvidia continued to shine.
Speaking of fluctuations, On Semiconductor (NASDAQ:ON) witnessed a 15% pullback in August. Despite this, analysts remain optimistic, foreseeing over a 30% upside potential for the stock. Given that the company surpassed expectations on both revenue and profit fronts in Q2 and its shares have risen by 45% year to date, the optimism is understandable.
Marvell Technology (NASDAQ:MRVL) another player in the semiconductor arena, has received a bullish nod from 83% of analysts covering the stock. This sentiment aligns with the company’s projected 16% upside potential. However, it’s essential to tread with caution. Susquehanna, in a recent note, did reiterate their positive stance on the company, but they also highlighted potential pitfalls in Marvell’s traditional segments like networking, storage, and consumer. That said, the firm’s shares have risen about 57% this year, and many eyes will be on its earnings report scheduled for release after the market closes on Thursday.
In conclusion, the semiconductor space, powered by the AI revolution, is buzzing with activity. Investors and market watchers have a lot to look forward to, given the promising trajectories of key players. But as always, it’s wise to keep an eye on market dynamics and company-specific challenges amidst the bullish forecasts.